Neil McTiffin, head of PwC's retail team in Manchester, said: “Retail sales were healthy in December compared to a year earlier, driven by strong growth in online sales and smaller non-food stores. However, the picture for the fourth quarter as a whole was somewhat less positive, with retail sales volume growth up only 0.4% on the previous quarter. Consumers are still spending, but there remains an element of underlying caution about future prospects and individual retailers have seen very mixed results over the Christmas period.

“This is consistent with recent indications from other sectoral output data that, while the UK economic recovery continued in the fourth quarter, it may not have sustained the strong above trend GDP growth rates seen in the third quarter of the year."

Chris Williamson, chief economist at Markit, said: “UK retail sales smashed through expectations in December. Despite the rise, sales over the fourth quarter as a whole slowed compared to previous quarter, suggesting growth in the wider economy may also have weakened, but the strength of the latest upswing bodes well for a continuation of strong economic growth as we move into 2014.

“Retail sales volumes rose 2.6 per cent in December, even after accounting for seasonal influences, according to the ONS, registering the largest monthly rise since February 2010. Growth rarely gets stronger than this.

“Sales were some 5.3 per cent higher than a year ago, indicating the fastest rate of year-on-year growth since late 2004.

“However, sales have been volatile in recent months, and the 2.6% increase in December follows disappointing data in prior months. Sales were up just 0.1 per cent in November and had fallen 0.9 per cent in October. Sales in the latest three-months were just 0.4% higher than in the previous three months as a result, suggesting the retail sector made a much weaker contribution to the economy in the fourth quarter than in previous quarters."

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The start of a new year is always a good time to look to the future and, having now digested our Christmas dinners and the various economic forecasters’ predictions for the year ahead, 2014 does seem to offer much better prospects than we have enjoyed for some years.

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